The topic of social protection of the vulnerable sections of the population, pensions and wage increases resonated by all political parties without exception in the run-up to this year’s parliamentary elections. In recent weeks, the issues have resurfaced. This time it was the president of the World Bank James D. Wolfensohn who, on his November 16 visit to Astana, urged Kazakh leaders to shift their focus from oil-based economic development to the development of health care and the educational system. In an interview to the opposition paper Epoha, Wolfensohn said that the World Bank was “ready to build a partnership with Kazakhstan in developing a more competitive and diversified economy to improve people’s lives”. He stressed that the oil economy harbors the risk of widening the gap between the rich and the poor, a social challenge which can be avoided only by investing in human resources. Wolfensohn suggested that the Kazakh government should work out a comprehensive program of social protection of its population.

At first appearance, one may conclude that diplomatically veiled criticism and timely warnings from the World Bank were duly appreciated by government. At a conference in Astana, the Minister of Labor and Social Protection Gulzhan Karagusova announced that the ministry would revise the methodology of calculating the minimal subsistence sum which currently makes 5330 tenge ($41) “to bring it closer to international standards”. Prime Minister Danial Akhmetov added that the government has drafted a new program of social reform for the years 2005 and 2007 in collaboration with the experts of the World Bank and the United Nations Development Program. Envisaged social reforms include, among other things, the mandatory social insurance which is to be introduced in 2005 and the so-called basic pension payments of 1500 tenge ($11) to all categories of pensioners. The Ministry also disclosed its plans to improve the mechanism of targeted financial aid to disabled people and low-income families. According to official sources, over the last few years the poverty level in Kazakhstan has come down from 18% to 12%. The bias toward social issues in next year’s draft budget shows encouraging signs of a changing attitude to the problems of the needy.

However, public confidence in the government has already been almost irremediably eroded by seemingly endless strings of failed attempts at social reform in the past. Worse still, social policies most frequently are discredited by the incompetence and irresponsibility of ministers themselves. Not long ago, the minister of education and science Zhaksybek Kulekeyev, a former financial executive often criticized for his incompetence in the realm of education, pushed through parliament his highly unpopular scheme of raising tuition fees in universities and colleges. Students in their final years at universities felt duped by the ministry and staged protest demonstrations refusing to sign a new contract. However, the minister of education succeeded in imposing a revised contract on students, which obliges every student to pay an extra 130,000 tenge ($1000). The standoff came amid growing criticism of falling educational standards in schools and universities. Most school graduates from rural areas cannot afford a university education. This splits society further into a caste of educated white-collars and disadvantaged unskilled laborers. Nothing suggests that this trend can be reversed just by increased government spending on education. Teachers and medical workers remain the lowest paid stratum of the salaried workers. Both Kazakhstani and foreign experts have warned on many earlier occasions that the real threat to Kazakhstan’s political stability may come not from international terrorism, but from the neglect of poverty and growing disparities of income. The average wage of an agricultural worker barely totals 12,000 tenge, the equivalent of $92, while a police officer receives 40,000 tenge ($307) per month.

It is too early to accept the announced social reforms as radical and a genuine about-face. Two factors may have prompted the government to accelerate (so far verbally) the pace of social programs: the need to maintain the country’s reputation as a market economy with a solid social basis in the face of growing pressure from international monetary organizations; and the upcoming presidential elections of 2006. In recent parliamentary elections, unpaid wages, miserable pensions and declining living standards turned out to be the most powerful usable gun in the hands of opposition parties. If the government succeeds in implementing promised social programs, it may effectively disarm the opposition on the eve of the presidential elections. If not, hollow promises are likely to turn into a ticking time-bomb which could threaten stability.